Final Thoughts
Final Thoughts
Written by John Packard
August 14, 2019
I received a call from the Congressional Quarterly today asking my opinion on steel prices, trade cases, capacity being added to the marketplace, etc. I did answer his questions as accurately as I could, which in many cases are subject to the decisions being made at various steel mills around North America, and whether those decisions take into consideration the needs of their customers, not only today but years into the future.
During the 2019 SMU Steel Summit Conference we will be discussing many of the questions asked of me today by the CQ reporter. We will be looking at the decisions being made by the domestic steel mills in the United States and Mexico, and we will entertain educated opinions as to what these decisions will mean for steel buyers in 2020 and beyond. If you have not already registered for the conference, you still have 10 days to rectify that oversight… For more information click here.
Here are some of the companies that registered executives to attend our conference over the past few days: Ferrosource LLC, Easteel SA, Samuel, Son & Co., Nucor Castrip, CSN LLC, TRAM, Bay Water Transportation, Cressaty Metals, Inc., First River LLC, Worthington Industries, and Sector 3 Appraisals.
One of the issues that arises when I am working on my price indices is how to deal with “outliers.” Outliers are prices that are significantly below what is being offered to most steel buyers. An outlier could be a special deal negotiated with just one buyer, it could be a mill like JSW Ohio that is still trying to buy its way into a market, it could be a number that is a week old and was not presented to me as such. As I go through the numbers, if there are numerous outliers – for example, if numbers from JSW (or another mill selling at the same level) are being referenced by multiple buyers – I cannot ignore them. The result being the lower end of our range is impacted.
Earlier this week, the vast majority of offers on hot rolled coil were being referenced by our data providers at $580-600 per ton, which would have given us an average of $590 per ton. However, we collected prices below the $580 level taking our range to $550-$620 per ton with an average of $585 per ton.
Steel buyers need to be aware of the nuances in the markets and should stay close to their core mill suppliers. Steel prices are negotiated and a low number from mill “A” could be quite different from mill “B”.
We will address steel index methodology at the SMU Steel Summit Conference during the opening segment of the program on Monday at 1 PM (and probably during the Managing Price Risk segment on Monday morning).
I continue to talk with those who are booked to speak during our conference. I am quite pleased with what I am hearing from the various speakers and their grasp of the key issues affecting their segment of the industry. We should have a great program from the very beginning until the end.
A quick note regarding our October Steel 101 workshop in Cincinnati. We have maybe two or three spots left. If you would like to learn more about the workshop or how to register go to www.SteelMarketUpdate.com/events/steel101
I will be in my office until next Thursday when I leave for Minnesota and then on the Atlanta to prepare for the conference.
If you need assistance in renewing your membership, upgrading your membership or becoming a new subscriber, please contact Paige Mayhair at 724-720-1012 or by email: Paige@SteelMarketUpdate.com
As always, thank you for your business as it is truly appreciated by all of us here at Steel Market Update.
John Packard, President & CEO
John Packard
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